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Wednesday, January 19, 2005

Siemens May Exit Mobile Business

( Via Thefeature) There is heavy speculation about Siemens exiting mobile business as its Fix it,close-it, sell-it deadline of Jan 27 approaches.The company overall has been going through a long restructuring process, and its CEO is stepping down in January after 12 years, so any move involving the handset unit wouldn't be a total shock, though the company's brand is still one of the most recognizable in the market. The unit's been under pressure to meet performance and profit goals as the Siemens has said it will close or sell underperforming businesses it can't fix.Siemens' exit would throw nearly 8 points of market share up for grabs, and wouldn't offer much of a return to shareholders. Some analysts are maintaining that because of this, and some similar moves in the company's past, a joint venture remains the most likely option. French manufacturer Alcatel combined its handset business with China's biggest manufacturer, TCL, earlier in the year in a joint venture assumed by many to be a precursor to Alcatel's pulling out of the market. A deal between Ningbo Bird and Siemens could take a similar shape, particularly as Siemens would like to grow its handset sales in China, and Ningbo Bird wants to boost its sales outside the country. The two companies would make a good fit, given Siemens' strength in R&D and software, and Ningbo's manufacturing heft in China. A Ningbo purchase of the Siemens unit, and its brand, would mirror Lenovo's purchase of IBM's PC business: a Chinese company buying a well-known Western brand to support its overseas expansion.There is now heavy fight for marketshare grab in the mobile market.
Although some estimates are saying the number of mobile-phone users could hit 2 billion by year's end, most predictions see handset sales growing by 10 percent or less. In 2004, the market grew by around a third, with the final tally being something like 630-670 million, depending on which analyst you like. Toss in Siemens' possible exit from the market with that slowdown, and there could be a lot of movement in the market in terms of share this year.

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